The desire to drive

But the quote in the second paragraph -- "Gas going down means freedom, even when everyone is worried about the economy" -- is one that policy makers need to keep reminding themselves, over and over.

People always want to use more energy, particularly gasoline. They will find new ways to use it as the price of it declines, ways we couldn't have imagined before they developed.

It's one of the reasons why CAFE standards as a long-term downward force on consumption ultimately come up short. Note I didn't say they fail. But they are touted in almost mystical terms, and CAFE supporters fail to account for Jevon's Paradox.

I've written about Jevon's Paradox before. As the efficiency of a type of energy consumption rises, meaning you can get more energy output from each unit of energy consumed, you begin to consume more units. So the energy efficiency of a 27 inch color TV improves dramatically, and you start watching a 60 inch color TV. The energy efficiency of a car increases, and now you find yourself with people commuting 50 miles to their jobs, trading the time on the road for a bigger house, bigger property and less congestion in their hometown. One of my favorite examples is that on Long Island, where I live, the head of the local electric utility said recently that better than 1 in 10 households has a spa/jacuzzi in their home. One in ten! Try to imagine your reaction in 1974 or 1975, during the first oil shock, if you told somebody that statistic would be in place in 30+ years. It only happened because the efficiency of a home hot tub increased dramatically, making possible that type of penetration into the consumer market.

It could be that the tighter CAFE standards that will be put in place over the next 10+ years in the US will combine with long-term prices that are high due to supply constraints, keeping Jevons Paradox in check. But maybe not.

It all comes down to the same thing. If you're a country that wants your energy consumption to decline, raise the price of it. Period. End.

That's why one of the emptiest arguments you'll hear from politicians is the US "has no energy policy." It does. It has several tenets, but the main one is that gasoline prices will be cheap. That's why the federal tax on gasoline is so low at 18.4 cts/gallon. (Diesel, which has greater energy efficiency, actually carries a tax about 6 cts higher). That is a policy choice. It doesn't have a fancy name like the New Deal, but it's a policy.